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Very interesting, that Piketty's "Capital in the 21st Century" is introduced in this article: A lot of other VCs and founders are also digesting Thomas Piketty
by selmnoo 13y ago
Very interesting, that Piketty's "Capital in the 21st Century" is introduced in this article:
A lot of other VCs and founders are also digesting Thomas Piketty’s new book, “Capital in the 21st Century.” With more than 200 years of data, it chronicles an inexorable rise in inequality that was punctuated in the middle of the 20th century by the Great Depression and World War II followed by 30 years of evenly-spread prosperity. Ultimately, it advocates a globally-coordinated tax on wealth.
I know that it's taboo on HN to get overly political, but I think because of Piketty's work we should talk about it (particularly, because Piketty's new piece is so groundbreaking [1] and incredibly well-backed with data). What do you guys think of his "global wealth tax" -- tax on capital (including real property), in the context of the new SV riches?
[1]: The book is being received as "the most important economiscs text of the decade" by a lot of high-placed economists, etc.: http://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century#Reception http://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Cen...
- ericd 13y agoI don't like the idea of a tax on wealth - it seems like it would discourage savings, as you have to use it or lose it. If I save up a nest egg, my tax bill shouldn't increase as my nest egg increases, eventually reaching an equilibrium where I have to keep working just to keep my savings constant. Much better would be a much higher top marginal tax rate like the one we had pre-Reagan, and including investment gains in that.
- collyw 13y agoI personally think a tax on (unearned) wealth makes a lot more sense than a tax on work / earnings.
- wutbrodo 13y ago> a tax on (unearned) wealth Doesn't the estate tax fully cover this case?
- 100k 13y agoIncluding capital gains in regular income taxes _would_ be a tax on wealth, though, wouldn't it? Certainly more so than it is now. To avoid discouraging savings, the wealth tax could be progressive. The tax on the average citizen's savings is negligible but rentiers pay a substantial portion. I think an inheritance tax is especially important to prevent the formation of generational wealth.
- ericd 13y agoIt would only be a tax on capital gains, not on the principal. And philosophically, why should investment income be treated any differently than income gotten due to effort? Property tax is a sort of wealth tax. It goes to fund local services that the occupants of that house presumably consume, though.
- dllthomas 13y agoInflation + capital gains tax => tax on principle. The actual rate would be low, though.
- bzbarsky 13y agoIt's an effective tax on principal if you tax nominal capital gains. If you want it to be a tax on actual "income" in real terms it needs to be a tax on real (i.e. inflation adjusted) capital gains. How much of a tax on principal it is depends on the inflation rate, of course; right now it's not much of one, but back in the 70s it would have been a bigger deal.
- ericd 13y agoYou're right, and I think the inflationary portion should be completely tax exempt.
- pcrh 13y agoThere already is a de facto tax on wealth, inflation.
- Houshalter 13y agoOnly a tax on holding currency, not wealth in general (assets and investments.) And many people argue that is just as bad.
- dllthomas 13y agoInflation itself is a tax on holding currency or currency-denominated assets, and that's certainly an important point. The combination of inflation and a capital gains tax would seem to produce an implicit tax on wealth in general, right?
- pcrh 13y agoHolding currency and also bonds. Property and shares are pseudo-index-linked, though, I grant you that.
- iopq 13y agoHow much are my stocks inflating?
- Symmetry 13y agoIt would be somewhat better to move to a progressive consumption tax by making money invested tax deductible but taxing the entire proceeds from the sale of investments.
- pbsurf 13y agoI'd like to see all taxes replaced by a wealth "tax" in the form of a voluntary--not coerced--payment to the state for the service of recognizing and protecting one's ownership of a piece of property. Payment would be encouraged by the fact that if an individual failed to pay the tax for some property, someone else could take it from them, pay the tax, and become the legally recognized owner, leaving the original possessor with no legal recourse.
- EpicEng 13y agoAnd you see no coercion in this ill-conceived scheme? "This tax is 'voluntary', but if you don't pay it someone will certainly come along and take your property from you." What world do you live in exactly?
- zanny 13y agoThat kind of concept would work with enough mobility to just leave states you disapprove of. I like to think a huge amount of political inertia in the last 30 years has been due to the lack of any new frontiers to settle. And it is hard to voluntarily withdraw from a state if that also means you have to somehow get accepted into another one, since almost every square inch of habitable land on Earth is state controlled, even Antarctica.
- stormbrew 13y agoSo you literally want to make rent-seeking the main means of accumulating wealth? This is a very strange economic theory you've got going here.
- dllthomas 13y agoThis comment would benefit from some elaboration (perhaps in place of some snark).
- mixmastamyk 13y agoThis is similar to Henry George's philosophy: http://en.wikipedia.org/wiki/Georgism http://en.wikipedia.org/wiki/Georgism There's a foundation of some sort in San Francisco that introduced it to me. It's a quite interesting idea. The TLDR is capitalism for what you produce, and socialism for natural resources. I'd like to see it tried out somewhere if it hasn't been already.
- apsec112 13y ago""How can you dismiss socialism so casually?" "I've thought a lot about this, actually; it was not a casual remark. I think the fundamental question is not whether the government pays for schools or medicine, but whether you allow people to get rich. In England in the 1970s, the top income tax rate was 98%. That's what the Beatles' song "Tax Man" is referring to when they say "one for you, nineteen for me." Any country that makes this choice ends up losing net, because new technology tends to be developed by people trying to make their fortunes. It's too much work for anyone to do for ordinary wages. Smart people might work on sexy projects like fighter planes and space rockets for ordinary wages, but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs. Life in the Soviet Union would have been even poorer if they hadn't had American technologies to copy. Finland is sometimes given as an example of a prosperous socialist country, but apparently the combined top tax rate is 55%, only 5% higher than in California. So if they seem that much more socialist than the US, it is probably simply because they don't spend so much on their military." http://paulgraham.com/resay.html http://paulgraham.com/resay.html (I know that in the US anything even vaguely leftist gets called "socialism", but Thomas Piketty, the author, is a genuine strong supporter of the French Socialist Party, and the focus of the book is explicitly on government action to prevent anyone from getting 'too' rich. I think it's a fair criticism.) EDIT: To those not familiar with British history, things got really bad during the 1970s. Inflation peaked at 27%. The government went bankrupt and had to go "cap-in-hand" to the IMF for a bailout. Garbage piled up in the streets because the sanitation workers were on strike. Bodies piled up because the gravediggers were on strike... (http://en.wikipedia.org/wiki/Winter_of_Discontent http://en.wikipedia.org/wiki/Winter_of_Discontent). I don't want to get into an argument about Thatcher, but everyone at all familiar with the history agrees that the country was in a mess.
- lmm 13y agoAnd yet England did well; the golden years of British innovation are the '50s and '60s when this policy was in effect. Whereas come Thatcher and the '80s and the lowering of taxes you see the destruction of British industry, ruination of national infrastructure (the railways are still recovering from that era's underinvestment), and even what felt like a cultural collapse.
- tomp 13y agoTax on real estate doesn't really work - see England/London: the council tax is simply imposed on the tenants (not even included in rent! has to be paid separately).
- DaveLond 13y agoNar, he means a land-value tax, which is raised from time to time in the UK.
- rahimnathwani 13y agoAlthough council tax is paid by tenants (as it's a tax on residents rather than owners) it impacts rents. The burden of council tax is thereby shared by both tenants and landlords. Two similar apartments on opposite sides of the same street can have significantly different market rents just because they are in different boroughs, and those boroughs have vastly different council taxes. The classic example in London used to be Wandsworth vs. Lambeth. Council tax, although based on properties, is meant to be a tax on residents, to put towards local services like police and rubbish collection. It was created after a previous tax (dubbed the 'poll tax'), which taxed each individual, regardless of the size of their abode, caused protests.
- kyrra 13y agoWindow tax[0] also does not work. Driving around the country you will see houses with broken out or boarded up windows so the owners didn't have to pay the tax. The tax was repealed in 1851 but the damage from it can still be seen. [0] http://en.wikipedia.org/wiki/Window_tax http://en.wikipedia.org/wiki/Window_tax
- spindritf 13y agoI know that it's taboo on HN to get overly political Not any more it isn't.
- nailer 13y agoWhy is inequality bad?
- voicereasonish 13y agoBecause some people want to pretend that a village idiot is as valuable as an Einstein to society. We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth.
- insuffi 13y agoYou have it all mixed up, my friend. Some people want to think that a village idiot doesn't deserve to live a miserable life because he is a village idiot. You're certainly pulling a lot of strawmen here. Come to think of it, almost reminds me of Fox News. They have a habit of demonizing the other group, just to make themselves feel better.
- mseebach 13y ago> They have a habit of demonizing the other group, just to make themselves feel better. Thank you for being the better person and not joining in.
- insuffi 13y agoCare to point out where exactly in my reply it was that I was demonizing him? I was drawing parallels with a news outlet that has a habit of engaging into similar misrepresentations of situations.
- mseebach 13y agoYou're not demonising him as such, you're grossly misrepresenting what he wrote, presumably to further your own agenda. The idea that he would think that a village idiot deserves to live a miserable life is entirely in your head, and quite at odds with the second paragraph of his comment.
- Houshalter 13y agoI think the policy is intended to harm rich people rather than benefit poor people. "I want to see my enemy suffer" rather than "I want to make my side better". That could be done with a basic income or similar policies, and could easily be paid for with normal taxes on income. It would also redistribute wealth over time. Also see the zero-sum fallacy (http://lesswrong.com/lw/2gd/fight_zerosum_bias/ http://lesswrong.com/lw/2gd/fight_zerosum_bias/). "Some people being richer necessarily means I am poorer."